The Charity Commission has ordered trustees to address governance failings at a charity that could not account for nearly £5m in spending in Iraq.
The commission opened a compliance case into Assyrian Church of the East Relief Organization (ACERO) in November 2018, after the Metropolitan Police began investigating a payment of £147,689 referenced in the charity’s accounts as ‘Iraq hostages’.
ACERO told the commission that “the funds were used to support released hostages and went to a bank account in Iraq belonging to a church”. But while the church confirmed receipt of the funds, ACERO trustees were unable to provide details as to how the money was used, the commission said.
The police decided not to pursue any further inquiries, and trustees told the regulator that the reference was an error in wording made by an accountant.
The commission escalated the compliance case to a statutory inquiry in 2020.
Further investigations revealed that ACERO sent more than £5m to Iraq between 2015 and 2018, but could show receipts for only £365,000 of this spending. From this total, receipts for £130,000 were undated. The commission said: “It is possible that these receipts may fall outside of the financial period under review.”
ACERO told Third Sector it “did not accept” the figures in the commission’s report.
The commission said it also found “open-source reporting which named two of the charity’s trustees as being involved in raising donations to secure the release of hostages being held in Syria by the proscribed terrorist organisation Daesh”.
ACERO was registered in 2008 to advance the Christian religion and provide relief of financial hardship and sickness in high-risk areas, including Iraq.
The charity’s reported income has dropped substantially in the past five years, from £521,000 in 2017 to £246,000 in 2018, then £65,000 in 2019 and £25,000 in 2020. Its income was just £427 in 2021.
Andy Darmoo, secretary of ACERO, told Third Sector: “The charity is disappointed in the report and has not accepted the figures that are contained within it. These simply stem from the commission asking for several years’ worth of financial transacions within a short time frame and the charity not being in a position to meet that deadline.”
Darmoo added that among the projects ACERO undertook during the period in question, more than £1.5m was spent on a section of the former British Forces base in Afghanistan, Camp Bastion, to house people fleeing the terrorist organisation Islamic State.
He said: “The charity went through a three-year police investigation, which was dropped, as expected, and is currently preparing legal action of its own. The commission’s statutory inquiry was being conducted at the same time and they were in communication with the police and had full access to all material that was under investigation.
“At this stage the charity would rather wait until these matters are concluded and then it will have further comments to release, including the treatment it has been subjected to during this entire period.”
Darmoo did not clarify who the charity was bringing legal action against.
The commission said it had ordered the charity to improve its governance and would be monitoring the trustees’ compliance with this order.